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The recent proposal of 12% service tax on money withdrawals from ATMs is going to create lot of concerns.

The Finance Minister’s move to impose service tax on operations, maintenance and management of automated teller machines (ATMs) may lead to some banks and companies managing ATMs to pass on the tax to customers. There are over 17,000 automated teller machines operating in India.

However, bankers said the service tax imposed on ATM operations would not bring down the number of transactions or hit the customers. “Cash withdrawals from the ATM of the customer’s bank will not attract this tax. However, if one withdraws money using other bank’s ATM, he has to pay some amount as service charge. Service tax would be levied on that,� said Union Bank chairman Cherian Varghese.

Express your reactions to it ...

Hello,

I can recall my mother's saying, Crewket knows crewket ideas, "Pampin kall pampu Ariyum" (Snake knows snake's foot).

Our Mr. Chidhambaram falls well with in this catogeroy. When so many things for the tax payers are made complusary and slapped hefty fine for any deafult.

he has not done even an iota for the tax payers for their money due from Income tax. department can take their sweet time and "mamul" for finalysing a tax return. one has to pay 10% of Trasury draft realeased towards your excess payment of tax?

Why this amount is not credited to assessee's bank account directly. i case you are not there, this trasury's draft will not be accpted for your clearence with out your signature on a Two rupee stamp? People are mislead by talking on line filing and clearence etc.

I wish this this is refered to Mr.Chidambaram and he has to explain non harrasment fool proff action by the Income tax department. He may just get away that this should be brought to the notice of anti corruption etc. Another divertory tactics.

God only to save us from this pin pricks and evils around salried tax payers.

K.Raman.[/b][b][/b]

Some responses I got thru mails to me...

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This will apply IF YOUR BANK CHARGES YOU FOR USING
A.T.M.s. Most of the banks do not charge the customers
for normal ATM operations. However, using other
banks'ATMs definitely will become costlier.

All said and done, this proposal is highly
inflationary and is again taxing the honest people who
account for their income and bank them.

But what else do you expect from a government which
has a law to tax 'you' because you withdraw 'your
money' from 'your account' (the Banking Cash
Transaction Tax). This was ostensibly to catch black
money, but only the Finance Minister seems to know
such people who will put black money in an account and
then withdraw it.

Sorry, if I have gone overboard.

Thanks,
Venkat

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Hello All,

I cannot understand why we have to pay service tax for withdrawing your own
money in the first place. Service tax is levied on income gained from
offered Service and the ATM withdrawl is your own money and not an income.
This proposal by FM is akin to what the Left is used to; rob the so called
rich to pay the poor; even if this was a sincere effort in paying the poor,
it can be appreciated. The poor in this country will never get any benefit,
it will be the politicians who will make money in the name of charity to
poor.We must all oppose this Service tax. By the way, why are the lawyers
and doctors out off this service tax net?? Is the FM scared of taxing them??
Or is he protecting his own memebers of the family from this tax??

Regards,

V.Ramachandran.

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hi
a lot of concern already does exist like the way
Ramkumar has expressed. In retrospect I sincerely have
started to believe strongly in our finance minister:
1. I sincerely believe he looks after the elite and
high class
2. I sincerely believe no one can take and force so
much money out of middle class
3. I have realised theres no true friend to the middle
class as no none of us believe if some one tells us
that we r middle class!!
cheers Mr Soft spoken Elite Chidambaram
regards
Srinivasan ayyar

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In the next budget, Chidambaram will ask for Service
Tax for depositing cash in your bank.

Anand. G.

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Dear all

This is is a misconception.Govt. has clarified that what is going
tobe taxed is the service of providing ATMs.That is those companies
which maintaim ATMs for a bank.If the bank itself is maintaining
it ,no tax is due.Most importently no body is going to tax 12.5
percent of YOUR money everytime you uae a ATM.Such a move would be
ultra vires of the Constitution!!


Dr.Santhosh
Madurai

Can someone tell me what exactly is the meaning of the word 'service' which occupies central place these days in our Finance Minister's mind?

As I understand it, 'Service' is something provided by someone to somebody to ease and facilitate the daily grind. Here the banks install the ATM machines at their cost to help their Customers to obtain cash quickly without having to stand in long queues. Tha Banks pay the sales tax, excise duty etc. to the Manuafacturer or the Supplier. They keep track of the transaction/s, do the replenishments of the cash stock in the machine/s et al. The Banks charge an annual fee to the Card Holder to compensate themselves for the cost of the 'service'. Some banks do not charge.
Now where does the Government of India step in into this scenario to claim a 'service tax' and that too a whopping 12% plus this . plus that. They are just bystanders. It is inconceivable for me to accept this.
this rate very soon a husband will be 'service taxed'f he buys a Saree for his wife, or the Wife will be taxed for serving food to the husband!
Mera Bharath Mahan!

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The govt. has clarified that this is only applicable when you do card withdrawal from a bank which is not yours; i.e the ATM is not owned by your bank. The Service Tax is Not Applicable when you withdraw from ATM of your bank. Presently for withdrawals using ATM of another bank one has to pay a charge of Rs.50/-; from April 1, 2006 service tax will be applicable on this charge. This incidence of using another banks ATM is not much and hence there will be no impact of service tax on majority of the users.

ksbalan

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Well I too agree with this.. but do you still feel charging around 12% for withdrawing money from other ATM's are fair..

Its already exisiting thing that banks charge some 20 Rs to 55 Rs for withdrawals using other bank' s ATM cards. But how they can charge something like 12% ?? This means you will be charged about 1200 for a withdrawal of 10000 Rs..

We use other ATM's only in case of emergencies, i.e when your ATMs are far away.. This current move is going to affect people who will be in such situations.